Precious Metals

     

 

 

Central Banks Produce Dire Consequences for the Free Market

Todd “Bubba” Horwitz has recently produced a podcast with our friend Claudio Grass of Global Gold, which we can be called up further below. Bubba has provided a summary of the topics discussed, an edited version of which you find below as well.

 

Global Gold CEO Claudio Grass, tireless advocate for free markets, sound money and liberty.

Photo via Global Gold

 

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How to Earn Money that Will Soon be Worthless Real Quick

There is a often-promoted plan to grow your wealth. Here’s the background. The dollar is going to be worthless. Soon! The reason is because [their peeps in high places tell them / the Chinese / end of the petrodollar / historical fiat currencies / Rothschild Jekyll Island Master Plan Private Fed / Fed printing] will cause the dollar to collapse and gold will rocket to $50,000.

 


The many ways of getting rich quick… sometimes it a bit takes longer than anticipated, as the panel to the right indicates. Getting rich off inflation is not impossible of course, but pulling it off in practice it is actually a lot more tricky than is generally believed. [PT]

 

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Chugging along in Nosebleed Territory

Last Friday, both the S&P 500 and the Nasdaq composite indexes closed at record highs in the US, with the Dow Jones Industrial Average only a whisker away from its peak set in March. What has often been called the “most hated bull market in history” thus far continues  to chug along in defiance of its detractors.

 

Can current stock market valuations tell us something about the future trend in gold prices? Yes, they actually can.

Image source:  The Neatest Little Guide to Stock Investing

 

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The Problem with Mining

If you can believe the screaming headline, one of the gurus behind one of the gold newsletters is going all-in to gold, buying a million dollars of mining shares. If (1) gold is set to explode to the upside, and (2) mining shares are geared to the gold price, then he stands to get seriously rich(er).

 

As this book attests to, some people have a very cynical view of mining…  We would say there is a time for everything. For instance, when gold went  from $270 to $320 in 2001-2002, the HUI index went from 35 points to 150 points, in a show of rather noteworthy outperformance (something similar happened in 2016).  The “sweet spot” for gold mining shares is usually early in gold rallies, before input prices catch up (empirically, gold has a habit of leading price moves in the main mining inputs) [PT]

 

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Bernanke Redux

Somehow, former Federal Reserve Chairman Ben Bernanke found time from his busy hedge fund advisory duties last week to tell his ex-employer how to do its job.  Namely, he recommended to his former cohorts at the Fed how much they should reduce the Fed’s balance sheet by.  In other words, he told them how to go about cleaning up his mess.

 

Praise the Lord! The Hero is back to tell us what to do! Why, oh why have you ever left, oh greatest central planner of all time. We are not worthy.

 

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The Wrong Approach

This question is no longer moot. As the world moves inexorably towards the use of metallic money, interest on gold and silver will return with it. This raises an important question.

Which interest rate will be higher?

 

It’s instructive to explore a wrong, but popular, view. I call it the purchasing power paradigm. In this view, the value of money — its purchasing power —is 1/P (where P is the price level). Inflation is the rate of decline of purchasing power.

 

American economist Irving Fisher, of “permanent plateau” fame. He inter alia came up with the “quantity theory of money” and the infamous “equation of exchange” (as Hayek once remarked, every student of economics should know about these, and then immediately forget about them again; we know exactly what he meant to convey…).  Fisher was quite the busybody. Like so many economists of his time, he became fascinated by the possibility to collate statistics and “measure” things in the economy. We have to thank him for index numbers like CPI as well, and it is probably fair to say that Fisher is the bedrock on which much of US mainstream economics rests (only things he was right about are rejected). In the early 20th century the erroneous idea began to take hold that economics should become more akin to the natural sciences. The data of economic history (i.e., statistics), would so the speak provide the numerical wherewithal to put some flesh on equilibrium equations previously only used as theoretical constructs which were understood not to apply to the real world of constant change. Why did economists so readily fall for this methodological lunacy? It was yet another momentous error – the growing belief that the economy had to be steered, or somehow centrally planned by “wise men”. No doubt tempting for those imagining themselves to be among the planners, and a catastrophe for the rest of us. [PT]

 

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Frexit Threat Macronized

The dollar moved strongly, and is now over 25mg gold and 1.9g silver. This was a holiday-shortened week, due to the Early May bank holiday in the UK.

The lateral entrant wakes up, preparing to march on, avenge the disinherited and let loose with fresh rounds of heavy philosophizing… we can’t wait! [PT]

 

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Jayant on Emerging Markets, Precious Metals and Mining Companies

Maurice Jackson of Proven & Probable has once again interviewed one of our friends, namely Jayant Bhandari, a frequent and highly valued contributor to Acting Man.  Jayant is probably best known to our readers for his strong criticism of the economic and nationalist policies implemented by prime minister Narendra Modi in India since he decreed the demonetization of the bulk of the cash currency circulating in the country (see his most recent article here).

 

Jayant Bhandari speaking at the 2016 Capitalism and Morality seminar.

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Election Effect Debate

Last week, we talked about the effect of the French election on the gold and silver markets, and noted:

 

Of course, traders want to know how this will affect gold and silver. As we write this, we see that silver went down 30 cents before rallying back up to where it closed on Friday. Gold went down about $20, and then half way back up.

At this point, we are not sure if the metals are supposed to go up because more printing. Or go down because the euro constrains France from printing. Or silver at least should go up because the economy is going to be better with France remaining in the Eurozone. Or go down because the ongoing malaise will only progress as it has been. Or some other logic… and the price gyrations this evening show that traders don’t agree either.

 

French precious metals terrorizers sow discord among traders [PT]

Photo credit: Christian Hartmann / Reuters

 

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Our Favorite Veteran of Real Wars and the Gold Wars…

Our friend Maurice Jackson at Proven & Probable has just done an interview with another friend of ours: Bob Moriarty, the founder of 321gold.com, one of the best and most popular gold sites on the web. Many of our readers probably know Bob, or at least know about him. We want to nevertheless provide a few introductory words below, to elaborate a bit on what Bob does for those who don’t know about him, and also to let readers know how we met him, why we like him and why we have the utmost respect for him.

 

Bob Moriarty: war veteran, ace pilot, famous investor, book author and founder of 321gold.com

 

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The Mathematics of Frexitology

This was also a holiday-shorted week. As we write this, the big news comes from the election in France. The leading candidate is a banker named Emmanuel Macron, with about 24% of the vote in a 4-candidate race. The anti-euro Marine Le Pen came in second with just over 21%. From the sharp rally in the euro, which was up about 2% at one point, we assume that observers believe the odds of France leaving the euro have just gone down.

 

The political program of Emmanuel Macron: ”Hamon is lost – Fillon is burned – It’s either me, or the blonde of the FN” – “Obviously, if you look at it like that…”  A concise summary of how one becomes president in France these days – provided the polls are not in error. It wouldn’t be the first time – don’t forget the “Bradley Effect”, which is probably even stronger in Le Pen’s case than it was in Trump’s. [PT]

 

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A Force Like Gravity

This was a holiday-shorted week, due to Good Friday, and we are posting this Monday evening due to today being a holiday in much of the world. Gold and silver went up the dollar went down, +$33 and +$0.53 -64mg gold and -.05g silver. The prices of the metals in dollar terms are readily available, and the price of the dollar in terms of honest money can be easily calculated.

 

Curved space-time… eventually, it will get you. The image above depicts the binary system PSR J0348+0432 – a neutron star orbited by a white dwarf in the constallation Taurus, discovered in 2007 [PT]

Illustration by John Antoniadis

 

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